Real GDP? Anyway to account for budget deficit spending (ie, the GDP growth would be worse at it is really just subsidized GDP growth, which would make republicans of late look even worse)?
@Anon - Johnson became President because Kennedy's head was seperated from his shoulder.
I don't ever like these charts. First of all Congress plays a huge role. Secondly, it gives the President control the day he takes office when there is obviously a huge time delay in policies actually having an effect.
It's a ridiculous chart, frequently cited by every latte sipping leftist all the way up (or down) to Paul Krugman.
GDP growth is hardly determined by presidential policies. It is the Fallacy of the Omnipotent Leader. How many of these presidents had at least one chamber of Congress controlled by the other party which would thwart their plans?
What other economic conditions existed which better explain GDP growth?
I have asked every liberal who ever credited Bill Clinton with spawning economic growth in the 1990s to tell me ONE policy of Clinton (enacted into law) which could theoretically or empirically be linked with the economic growth. His stimulus bill FAILED to pass Congress. His health care bill FAILED to pass Congress. He never enacted the tax cuts he promised.
The best (and only) response was NAFTA - a Republican idea which Clinton weakened.
Who should receive credit for the economic growth of the economy in the 1990s? The ECONOMY, stupid!
Economic policies, even if you believe they are effective, have a long and variable lag. The recession in 1Q 2001 clearly wasn't the result of any of Bush's policies - he had been in office less than 2 months.
"Republican" economic policies will almost always create a good economy, aside from the economy's natural fluctuations. The thing is, historically most Republicans have not been, well, "Republican."
Under Eisenhower, we had a top marginal income tax rate of 90%. Kennedy sought to cut the taxes (which the Republicans were against at the time!) and he got the top rate cut to 70%, although I think Johnson reversed some of his tax cuts.
Johnson also enacted his big-spending "Great Society" program. Nixon was a staunch Keynesian, basically a hardcore Democrat by modern standards, in terms of his economics. He enacted wage and price controls and created a lot of new government agencies (the Environmental Protection Agency being one of them!). When asked who was the worst President economically of the 20th century, Milton Friedman said Nixon.
Ford was more just a continuation of this type of stuff, as was Carter.
Reagan came in and completely revolutionized economic thought by calling for massive tax cuts, which was considered nuts at the time as it was believed tax cuts would lead to inflation, and there was fear of a possible Wiemar Republic-style inflation at the time; so for Reagan to call for something the entire economic establishment thought would increase inflation further was just crazy.
Reagan also called for government to cut spending, also considered nuts as the idea of the Keynesians is the last thing you do in a recession is cut spending.
All of the establishment Republicans at the time for the most part said Reagan's "supply-side" economics were fantasy and wouldn't work too (including G.H.W. Bush). Also interesting is when Reagan sought to deregulate the financial industry, it was the Republicans who tried very hard to thwart him.
Establishment Republicans and Reagan Republicans are different breeds, which is why we really haven't seen another Reagan yet. Establishment Republicans are really just a different variant of the Democrats.
Reagan had to run a deficit to pay for his defense spending which was crucial to beating the Soviets (the Soviet Union was not "doomed to collapse" as the Left like to say to take credit from Reagan) and also the Democrat Congress would not cut social spending as Reagan wanted.
Overall, the Reagan deficit (which reversed itself around 1985 or 1986) had four causes:
1) Paul Volcker at the Federal Reserve driving the economy into a recession to fix the inflation automatically drove up the deficit
2) Reagan's tax cuts initially drove up the deficit
3) Reagan's defense spending
4) Congress wouldn't correspondingly cut social spending.
And when Reagan reluctantly signed off on a capital gaisn tax increase, it cut revenues and he later said that was one of his big mistakes.
George H. W. Bush enacted a HUGE tax increase and drove the economy into a recession. Then Bill Clinton became President and tried governing as a Leftist during his first two years, but then the Republicans took back Congress, and their conservatism forced him to govern as a moderate.
Under Clinton we saw fiscal conservatism, this because as pointed out many of Clinton's big-spending plans like stimulus package, healthcare, and child healthcare, were thwarted, and also defense spending was able to be drastically scaled back thanks to Reagan's beating the Soviets.
We saw a tax increase which slowed economic growth a bit, but then Clinton reluctantly signed a capital gains tax cut in 1997 (28% to 20%), revenues surged and in 1998 we achieved a surplus. There was also the Dot Com bubble, which itself was a byproduct of the Reagan deregulation of the financial and technology industries. The bubble created a lot of new technology and innovation and revenues, but it was a bubble nonetheless and in 2000 it popped.
We saw NAFTA completed, which had been started by Reagan. And finally we saw welfare reform, into which Democrats and I think Clinton had to be dragged kicking and screaming.
Then President Bush took over and the only really bad thing he and the Republicans did, from an economic standpoint, was TOO MUCH SPENDING. If President Bush had kept spending limited and pushed the Republicans to remain so, we probably would have seen a surplus.
So if you notice, it doesn't matter who is in charge, Democrats or Republicans, what matters is the POLICIES passed. If Democrats pass Republican-style policies, the economy fairs better. If Republicans pass Democrat-style policies, the economy fairs badly. But usually Democrats are the ones for big spending, high taxes, regulation, and all that and Republicans are on paper for low taxes, limited government, fiscal conservatism, light efficient regulation, etc...but as of late they've been huge spenders so they haven't been fiscally conservative.
Scott, your mistake with the chart is not an issue. The GDP growth numbers are not in dispute.
What is in dispute is whether the party of the person occupying the White House during an economic boom/bust is a significant explanatory variable.
If your intent was to look at the effect of policies on GDP growth, then you should look at individual policies, when they were enacted, when they took effect, the theoretical reason why it would affect GDP growth, and who were the major proponents of the policy.
If there were a magic political formula for GDP growth, every president would use it. It is a complete fallacy that presidents (or even the entire government) control our economic destiny.
That fallacy was created by central planners: oligarchs and socialists, who placed too much faith in their own wisdom and power. That's why socialist "command" economies are called "planned" economies in those countries. They see our system as chaotic - subject to the whimsy of markets. Their system is planned and controlled ostensibly for the public good, but inevitably for the good of the leaders and their apparatchiks.
There's a reason why Soviet store shelves were empty and American supermarkets were filled from floor to ceiling with row after row of thousands of goods. Markets work in almost magical fashion both despite and because of human self-interest. Central planning fails because of hatred, selfishness, and self-reinforcing human errors.
There's not a single instance of an economic crisis in American history that cannot be traced back to unwise government policy distorting market decisions.
Robert, Thanks for the insightful comments. Just for the record I don't drink latte. Also, I don't have a pony tail, earring or sandals though I did once own a tie died t shirt.
Are these two statements contradictory or am I missing something?
"It is a complete fallacy that presidents (or even the entire government) control our economic destiny."
"There's not a single instance of an economic crisis in American history that cannot be traced back to unwise government policy distorting market decisions."
Scott, the notion that government can "guide" or "manage" the economy is a fallacy. The economy is mostly a self-regulating organism. All government can do is create the best environment for the economy to grow and prosper.
HOWEVER, unwise government policies CAN screwup the economy through intervention.
14 comments:
Am I reading that correctly? The average GDP growth under a Democrat was generally better then under a Republican?
Seems counter intuitive.
Real GDP? Anyway to account for budget deficit spending (ie, the GDP growth would be worse at it is really just subsidized GDP growth, which would make republicans of late look even worse)?
Pity. this guy has a good one:
http://voxday.blogspot.com/2009/05/stress-and-debt-test.html
Isn't it Congress that matters concerning economic growth?
Should Kennedy precede Johnson? I'm assuming the listing of President's names is in chronological order.
Cappy Cap - can you double check the figures - I don't get the Y axis...
@Anon - Johnson became President because Kennedy's head was seperated from his shoulder.
I don't ever like these charts. First of all Congress plays a huge role. Secondly, it gives the President control the day he takes office when there is obviously a huge time delay in policies actually having an effect.
It's a ridiculous chart, frequently cited by every latte sipping leftist all the way up (or down) to Paul Krugman.
GDP growth is hardly determined by presidential policies. It is the Fallacy of the Omnipotent Leader. How many of these presidents had at least one chamber of Congress controlled by the other party which would thwart their plans?
What other economic conditions existed which better explain GDP growth?
I have asked every liberal who ever credited Bill Clinton with spawning economic growth in the 1990s to tell me ONE policy of Clinton (enacted into law) which could theoretically or empirically be linked with the economic growth. His stimulus bill FAILED to pass Congress. His health care bill FAILED to pass Congress. He never enacted the tax cuts he promised.
The best (and only) response was NAFTA - a Republican idea which Clinton weakened.
Who should receive credit for the economic growth of the economy in the 1990s? The ECONOMY, stupid!
Economic policies, even if you believe they are effective, have a long and variable lag. The recession in 1Q 2001 clearly wasn't the result of any of Bush's policies - he had been in office less than 2 months.
Feel free to double check the figures. They're all from this site or the links there.
http://www.eriposte.com/economy/other/demovsrep.htm
Looks like I did screw up on the Kennedy/Johnson thing. I wouldn't be surprised if there are other errors, it's the first chart I've ever done.
My objective in posting the chart was to raise the question, is there any evidence that Republican policies result in a better economy?
"Republican" economic policies will almost always create a good economy, aside from the economy's natural fluctuations. The thing is, historically most Republicans have not been, well, "Republican."
Under Eisenhower, we had a top marginal income tax rate of 90%. Kennedy sought to cut the taxes (which the Republicans were against at the time!) and he got the top rate cut to 70%, although I think Johnson reversed some of his tax cuts.
Johnson also enacted his big-spending "Great Society" program. Nixon was a staunch Keynesian, basically a hardcore Democrat by modern standards, in terms of his economics. He enacted wage and price controls and created a lot of new government agencies (the Environmental Protection Agency being one of them!). When asked who was the worst President economically of the 20th century, Milton Friedman said Nixon.
Ford was more just a continuation of this type of stuff, as was Carter.
Reagan came in and completely revolutionized economic thought by calling for massive tax cuts, which was considered nuts at the time as it was believed tax cuts would lead to inflation, and there was fear of a possible Wiemar Republic-style inflation at the time; so for Reagan to call for something the entire economic establishment thought would increase inflation further was just crazy.
Reagan also called for government to cut spending, also considered nuts as the idea of the Keynesians is the last thing you do in a recession is cut spending.
All of the establishment Republicans at the time for the most part said Reagan's "supply-side" economics were fantasy and wouldn't work too (including G.H.W. Bush). Also interesting is when Reagan sought to deregulate the financial industry, it was the Republicans who tried very hard to thwart him.
Establishment Republicans and Reagan Republicans are different breeds, which is why we really haven't seen another Reagan yet. Establishment Republicans are really just a different variant of the Democrats.
Reagan had to run a deficit to pay for his defense spending which was crucial to beating the Soviets (the Soviet Union was not "doomed to collapse" as the Left like to say to take credit from Reagan) and also the Democrat Congress would not cut social spending as Reagan wanted.
Overall, the Reagan deficit (which reversed itself around 1985 or 1986) had four causes:
1) Paul Volcker at the Federal Reserve driving the economy into a recession to fix the inflation automatically drove up the deficit
2) Reagan's tax cuts initially drove up the deficit
3) Reagan's defense spending
4) Congress wouldn't correspondingly cut social spending.
And when Reagan reluctantly signed off on a capital gaisn tax increase, it cut revenues and he later said that was one of his big mistakes.
George H. W. Bush enacted a HUGE tax increase and drove the economy into a recession. Then Bill Clinton became President and tried governing as a Leftist during his first two years, but then the Republicans took back Congress, and their conservatism forced him to govern as a moderate.
Under Clinton we saw fiscal conservatism, this because as pointed out many of Clinton's big-spending plans like stimulus package, healthcare, and child healthcare, were thwarted, and also defense spending was able to be drastically scaled back thanks to Reagan's beating the Soviets.
We saw a tax increase which slowed economic growth a bit, but then Clinton reluctantly signed a capital gains tax cut in 1997 (28% to 20%), revenues surged and in 1998 we achieved a surplus. There was also the Dot Com bubble, which itself was a byproduct of the Reagan deregulation of the financial and technology industries. The bubble created a lot of new technology and innovation and revenues, but it was a bubble nonetheless and in 2000 it popped.
We saw NAFTA completed, which had been started by Reagan. And finally we saw welfare reform, into which Democrats and I think Clinton had to be dragged kicking and screaming.
Then President Bush took over and the only really bad thing he and the Republicans did, from an economic standpoint, was TOO MUCH SPENDING. If President Bush had kept spending limited and pushed the Republicans to remain so, we probably would have seen a surplus.
So if you notice, it doesn't matter who is in charge, Democrats or Republicans, what matters is the POLICIES passed. If Democrats pass Republican-style policies, the economy fairs better. If Republicans pass Democrat-style policies, the economy fairs badly. But usually Democrats are the ones for big spending, high taxes, regulation, and all that and Republicans are on paper for low taxes, limited government, fiscal conservatism, light efficient regulation, etc...but as of late they've been huge spenders so they haven't been fiscally conservative.
Scott, your mistake with the chart is not an issue. The GDP growth numbers are not in dispute.
What is in dispute is whether the party of the person occupying the White House during an economic boom/bust is a significant explanatory variable.
If your intent was to look at the effect of policies on GDP growth, then you should look at individual policies, when they were enacted, when they took effect, the theoretical reason why it would affect GDP growth, and who were the major proponents of the policy.
If there were a magic political formula for GDP growth, every president would use it. It is a complete fallacy that presidents (or even the entire government) control our economic destiny.
That fallacy was created by central planners: oligarchs and socialists, who placed too much faith in their own wisdom and power. That's why socialist "command" economies are called "planned" economies in those countries. They see our system as chaotic - subject to the whimsy of markets. Their system is planned and controlled ostensibly for the public good, but inevitably for the good of the leaders and their apparatchiks.
There's a reason why Soviet store shelves were empty and American supermarkets were filled from floor to ceiling with row after row of thousands of goods. Markets work in almost magical fashion both despite and because of human self-interest. Central planning fails because of hatred, selfishness, and self-reinforcing human errors.
There's not a single instance of an economic crisis in American history that cannot be traced back to unwise government policy distorting market decisions.
Robert, Thanks for the insightful comments. Just for the record I don't drink latte. Also, I don't have a pony tail, earring or sandals though I did once own a tie died t shirt.
Are these two statements contradictory or am I missing something?
"It is a complete fallacy that presidents (or even the entire government) control our economic destiny."
"There's not a single instance of an economic crisis in American history that cannot be traced back to unwise government policy distorting market decisions."
Scott, the notion that government can "guide" or "manage" the economy is a fallacy. The economy is mostly a self-regulating organism. All government can do is create the best environment for the economy to grow and prosper.
HOWEVER, unwise government policies CAN screwup the economy through intervention.
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